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Nvidia has surpassed Microsoft and Apple to become the world’s most valuable company after months of explosive share price growth, driven by demand for its chips and an investor frenzy over artificial intelligence.
The company’s shares rose 3.2 percent to $135.18 on Tuesday, taking its market capitalization to $3.332 trillion and surpassing the two tech giants that have long battled for pole position in U.S. stock markets.
Nvidia has been the primary beneficiary of a surge in demand for chips that can train and run powerful generative AI models like OpenAI’s ChatGPT. In less than two years, it has transformed from a $300 billion company struggling with a chip glut exacerbated by a cryptocurrency crisis to one of the most powerful tech companies in the world, while other Silicon Valley giants lining up to secure the latest technology. Products.
The stock’s huge gains have single-handedly fueled about a third of the S&P 500 index’s 14 percent gain so far this year, in a rally that has shocked even optimistic observers.
“These are animal spirits now, it’s human emotion taking over,” said Ted Mortonson, technology strategist at Baird. “Nvidia is a fantastic company, don’t get me wrong. There are many drivers[for the stock]. . . only 40 percent in a month, that is not normal.”
The Silicon Valley-based company, which was founded 31 years ago to build PC graphics cards for video gamers, has seen consecutive quarters of massive revenue growth over the past year, up 265 percent year-over-year in February and 262 percent in February. Be able to. Shares are up about 170 percent since the beginning of the year.
Nvidia CEO Jensen Huang has declared that the company is at the center of a new “industrial revolution,” unleashing the power of generative AI to transform all sectors of the global economy with intelligent computing.
Google, Microsoft and Amazon have all purchased their “Hopper” series of graphics processing units for their cloud services. Nvidia’s software ecosystem, Cuda, which provides tools to developers using its chips, is strengthening its dominance.
Meanwhile, it’s rolling out its new generation of more powerful ‘Blackwell’ chips, with Huang promising a ‘one-year cadence’ of new releases. Competitors like AMD and Intel have launched their own competing AI chips, but have yet to capture meaningful market share from Nvidia.
“Someone has to be number one, and it’s not like Nvidia stock has gone up on its own; its financials have gone up even more,” said Stacy Rasgon, a chip analyst at Bernstein. “I’ve never seen anything like this in terms of the actual economic factors behind this. It’s pretty amazing.”
The race to capitalize on the opportunities offered by generative AI has swept through the technology sector. At its annual developer conference last week, Apple joined in, announcing that its own set of generative models would be embedded in its new operating systems, and signing a major partnership deal with OpenAI.
Nvidia’s growing influence over broader stock indexes has fueled concerns about the long-term sustainability of the market’s rally, but few analysts or investors predict a near-term reversal.
Of the 72 Nvidia analysts Bloomberg followed, only one rated the stock a “sell.”
“This top-heaviness of the market is really worrying. . . we are at a level of concentration that we haven’t had since 1999 – that’s problematic,” said Hans Olsen, chief investment officer at Fiduciary Trust, the $23 billion asset manager.
“But if you think back to the technology bubble, which lasted from 1997 to March 2000, it had a long runway. This one also has an airstrip,” he added.
Nvidia has joined the dominant duo of Apple and Microsoft, which has been battling for the position of the most valuable company in the US – and often the world – for more than a decade. The last time a U.S. company was worth more than both was in 2011, when ExxonMobil was the country’s most valuable company.